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Cheaper veg in New Zealand contributes to food prices dropping 0.1%
New Zealand food prices eased in October as fruit and vegetables came in for heavy discounting at grocery stores when they came into season.
The food price index fell 0.1 percent on a seasonally adjusted basis versus the prior month, Statistics New Zealand said.
Fruit and vegetables cost 1.3 percent less than they did in September on a seasonally adjusted basis, while grocery food prices eased 0.8 percent. A kilogram of tomatoes, for example, was $7.68 in October compared with $10.02 in September.
"Although fruit and vegetable prices have dropped this month, the impact of bad weather earlier in the year continues to cause higher prices compared with this time last year," consumers price index manager Matthew Haigh said.
Annual food prices rose 2.7 percent, with fruit and vegetable prices increasing 4.4 percent, while grocery food prices were up 2.8 percent, led by higher prices for most dairy products including butter, fresh milk, and cheese, Stats NZ said.
Food prices account for about 19 percent of the consumers price index, which is the Reserve Bank's mandated inflation target when setting interest rates. A spike in food prices and a recovery in oil prices earlier this year led to some recent inflationary pressure, although housing-related costs are still the dominant contributor to higher consumer price. However, while the central bank lifted its forecast inflation at its November monetary policy review it still does not expect to begin lifting rates until June 2019 at the earliest.
Stats NZ updates the food price index basket every three years to reflect what households typically spend on food. The basket has 162 different food items.